Why a stronger dram doesn't necessarily lead to lower prices for imported goods - 5 factors
YEREVAN, September 17. /ARKA/. The strengthening of the Armenian dram can curb imported inflation, but the exchange rate is only one factor in the final price of a product. Prices are simultaneously affected by the global price of goods, the currency of specific foreign trade transactions, logistics, energy, and other costs.
This is particularly evident against the backdrop of current price dynamics. In August 2026, food and non-alcoholic beverage prices in Armenia were 6.4% higher than the previous year, with overall inflation at 4.4%.
A stronger dram can mitigate external price pressure, but does not necessarily fully offset it.
The global price of a product can rise alongside a stronger dram
For imported goods, the starting point is their price on the foreign market.
For example, the FAO Food Price Index reached 133.3 points in August 2026, an increase of 1.9% month-on-month and 2.5% year-on-year. This refers to the international price index for basic food commodities, not retail prices directly in Armenia.
The international sugar price index increased particularly significantly in August, by 11.9% month-on-month. The grain price index increased by 2.2%, and the vegetable oil price index by 0.6%.
Therefore, even with a strengthening national currency, the external price of a specific imported good can simultaneously increase.
For imports, the dollar exchange rate isn't the only factor
A strengthening of the dram against the dollar doesn't mean its simultaneous strengthening against all currencies.
Therefore, the USD/AMD exchange rate alone isn't sufficient to assess the change in the actual costs of a specific import: the currency in which the relevant foreign trade transaction is conducted is also important.
Therefore, it's more appropriate to consider the impact of the exchange rate on prices more broadly than just the dynamics of the dollar/dram pair.
The global price is only part of the final cost
After purchasing a product abroad, additional expenses arise: transportation, insurance, storage, customs clearance, domestic logistics, and other operating costs.
Moreover, some of these expenses may also depend on the situation in global commodity and energy markets.
Specifically, the head of the Central Bank of Armenia, Martin Galstyan, yesterday cited rising global oil prices as a significant factor in consumer prices in Armenia. According to Armstat, gasoline in the country was 11.7% more expensive in August than a year earlier, and diesel fuel was 25% more expensive.
Therefore, a favorable change in the exchange rate can occur simultaneously with increases in other components of the final cost of a product.
Exchange rate changes are not immediately reflected in prices
Even with a significant strengthening of the national currency, the retail price does not necessarily change in tandem with the exchange rate.
The product may have been purchased previously at a different rate, or the importer may still have old stocks and previously concluded contracts. Therefore, exchange rate changes occur along the chain from procurement to retail with a time lag. For the same reason, a weakening dram is not necessarily fully and immediately reflected in prices.
Inflation within Armenia depends not only on imports
Finally, prices are not determined solely by external factors.
Wages, rent, lending, domestic demand, service costs, and other domestic costs can also influence final prices.
The Central Bank's latest decision to raise the rate was made, in particular, amid signs of increased demand. The regulator noted continued strong economic activity, as well as the dynamics of imports of final consumer goods and retail trade.
Thus, the dram exchange rate is an important, but not the only, factor in price dynamics. A strengthening of the national currency can curb import costs, but concurrent global and domestic factors can weaken this effect.
ARKA Data & Analytics
